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R.I. Federal Court Denies Motion To Remand Finding Settlement Demand in Personal Injury Claim Does Not Determine Jurisdiction Amount

The Rhode Island federal district court has accepted a report and recommendation that a motion to remand a personal injury claim case be denied because the probable value of the claim exceeds the jurisdiction amount. The Court rejected plaintiff's argument that a settlement demand of $74,500 established that the case was below the jurisdictional amount. The court said it could rely on judicial experience and common sense in determining that the claim had the potential for significant damages exceeding $75,000.

Plaintiffs are the parents of a two year son. They were in a Wal-Mart store when their son ingested a drain cleaner product containing sodium hydroxide and sodium nitrate made by Iron Out, Inc. The product was displayed within reach of a two-year-old despite a warning on it stating: "POISON: KEEP OUT OF REACH OF CHILDREN. CAUSES SEVERE BURNS ON CONTACT. HARMFUL OR FATAL IF SWALLOWED OR MISUSED." The son was rushed to the emergency room and admitted to the hospital for "serious injuries," including chemical burns to his mouth, ulcers on his tonsils and upper GI pain. He remained hospitalized for several days. It took several weeks for the ulcers to heal sufficiently so he could eat solid food.

Before filing suit, plaintiffs made a settlement demand on Wal-Mart for $74,500. The claim did not settle and plaintiffs sued Wal-Mart and Iron Out in Superior Court. The complaint did not state an ad damnum, consistent with state law. Iron Out said it would remove the case unless plaintiffs stipulated that the damages were less than $75,000. Plaintiffs declined and Iron Out removed.

Plaintiffs moved to remand the case, arguing that the jurisdictional amount had not been established to the requisite legal certainty. The court said the burden of establishing federal jurisdiction remains on the party seeking removal. It added that the motion to remand should be denied if the court finds by a preponderance of the evidence that the amount in controversy exceeds $75,000 unless plaintiffs can demonstrate that the claim was worth less to a legal certainty.

The court said in making this determination it should have four considerations: 1) if the jurisdictional amount is not apparent from the complaint, it can look to the notice of removal and any other materials submitted by the parties; 2) which party has better access to the relevant information; 3) the time of removal, and 4) whether defendant has met its burden quickly without an extensive fact-finding inquiry. Moreover, each plaintiff's claim must be considered separately; the jurisdictional amount cannot be met by aggregating plaintiffs' claims. However, if the son's claims meet the jurisdictional amount, the court may exercise supplemental jurisdiction over the parents' claims.

While a settlement demand is evidence of the amount in controversy, it is not dispositive. In considering the value of the claim, "the Court should rely on judicial experience and common sense." The court also considered a Providence Journal article about the incident that was entered into evidence. The court found that the son's serious injuries permitted the inference that there was more than $75,000 in controversy. It cited to several reported decisions involving similar incidents in which the damages sought exceeded $100,000. It also considered reported settlement values as described in the "Personal Injury Valuation Handbook." Finally, the court said it could consider plaintiffs' refusal to stipulate that the damages were capped at $75,000. It found that the claim exceeded the jurisdictional amount and denied the motion to remand.

Hogan v. Wal-Mart Stores East, LP, C.A. No 13-603, 2104 WL 66658 (D.R.I. Jan. 8, 2014)

For information about our products liability defense practice, please see: http://www.sfandllaw.com/Practice-Areas/Product-Liability-Defense.shtml.

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